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Perspectives one year into hospital price transparency rules

Mar 01, 2022

Perspectives on hospital price transparency are evolving since the law took effect a year ago, and, despite some initial concerns, a few silver linings have emerged for hospitals.

There was natural reticence at first as hospitals worked to meet the complex demands of the new law, in some cases calculating for hundreds of pricing combinations that could change for something as mundane as a patient’s age.

The administrative effort to publish those costs while also juggling the demands of a global health pandemic overwhelmed some healthcare providers.

While it’s true that there’s still work to be done for most hospitals to reach full compliance, leaders are finding some benefits as they compile the data to create the shoppable services listings and costs to consumers.

Many hospitals, and especially smaller ones, did not have a good handle on the nuances of their existing contracts before starting that process of complying with price transparency requirements.

What’s emerged through the price transparency process is a clearer understanding of how hospitals are getting reimbursed from insurance companies and greater perspective on the relative discounts each of those commercial contracts is generating compared to each other. That creates opportunities for hospitals to re-examine those contracts and potentially renegotiate with more favorable terms.

Price transparency was intended primarily to help patients assess and consider the most cost-effective treatments, but making those costs pubic has created an opportunity for a “silver lining” to the hospitals, which can now examine how their negotiated contractual rates stack up with their competitors. Reviewing competitor contracts could provide valuable insights that lead to repricing or renegotiation strategies. 

Despite unexpected opportunities, some of the initial concerns raised by hospital administrators about price transparency requirements have not changed during the first year.

Compiling a searchable list of hospital services with negotiated costs by individual insurance contract and product is an immense task. Some hospitals have hired outside help to assist in compiling and publishing the data, and multiple surveys show more than half of U.S. hospitals are still not in full compliance with the pricey transparency law.

 As of December 2021, the Centers for Medicare and Medicaid Services has issued 335 warnings.

The bulk of hospitals are somewhere in the middle, meeting some but not all of the price transparency requirements, and reasons for non-compliance go further than just COVID-19 and staffing concerns.

Whether price transparency will achieve its ultimate goal — to inform patients on cost options — is still unclear. Just as the fees and variables are difficult to compile for hospitals, they are also difficult to access by patients. Deductible status, co-pays, pre-authorization requirements and additional treatments or medications that may vary by patient make it difficult for someone to know with certainty what they will pay for a hospital visit. The final out-of-pocket cost to the patient may be very different than what the hospital price list shows.

Some hospitals are reporting their price transparency shoppable service tools have generated only “single digit” clinics in the first year, which may be an indicator that the information is not resonating with patients. Even if that’s true, hospitals must push ahead to meet the parameters of the price transparency requirements.

Hospitals should prioritize negotiated commercial contracts that account for the most revenue in making pricing data available to consumers.  Hospitals should also consider the silver lining of greater access and availability of prices online, and take advantage of the opportunity to re-examine existing contracts and use the knowledge of competitor contract prices for your own planning.

How Wipfli can help

From reviewing your existing contracts to developing a machine-readable file and shoppable service tool for your organization, our price transparency solutions can help ensure you are in compliance. Learn more on our hospital price transparency solutions web page or keep up with the latest news in our Hospital Price Transparency Resource Hub

Author(s)

Nicholas E. Smith
Principal
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